Study Finds Many Children Don't Benefit From CreditsListen, when Newt Gingrich is in opposition to the Heritage Foundation, start looking for the Four Horsemen, OK?
By JASON DePARLE (NY Times)
Published: October 2, 2005
WASHINGTON, Oct. 1 - More than a quarter of American children - and half of black children - belong to families too poor to fully qualify for the $1,000-a-year child tax credit, which President Bush signed four years ago and has cited in arguing that his program of sweeping tax cuts helps low-income families, a new study has found.
The numbers come from an analysis by the Tax Policy Center, a nonpartisan group in Washington, and cast light on an important benefit for working families at a time when the hurricane damage in the Gulf Coast has Mr. Bush and others vowing to address poverty and racial division.
With an annual value of $47 billion, the credit is the government's largest children's subsidy and one that has provoked sharp partisan fights. Many conservatives, viewing it solely as a tax cut, want to reserve the credit for families that owe federal income tax. Many liberals, viewing it as a broader children's allowance, want to extend it to poorer workers, who they say need it most.
In 2001, Mr. Bush signed a compromise that extends the credit, in the form of an annual government check, to some working families that earn too little to owe income tax. Still, the study found that the families of 19.5 million children were too poor to receive the full $1,000 benefit. About half get a partial benefit, and half get nothing. More than three-quarters have parents who work.
While 18 percent of white children are in families too poor to claim the full credit, the figure is 50 percent among black children and 47 percent among Hispanics. The credit pays an average of $721 a year to white children, $564 a year to black children and $638 a year to Hispanic children.
Told of the study, which will be published Monday, some conservatives repeated their opposition to making the credit more of an antipoverty program. "This is completely and utterly predictable," said Dan Mitchell, an economist at the Heritage Foundation, a Washington research group influential with Capitol Hill Republicans. "People who don't pay taxes don't get a tax cut."
Mr. Mitchell said that low-wage workers received a total of $39 billion a year from a similar program, the earned income tax credit. "It's not like they're not getting any redistribution from the government," he said. "We want less income redistribution, not more."
But Newt Gingrich, the former Republican House speaker, expressed surprise at the racial gap. "That's a stunning number," he said, referring to the half of black children who fail to receive the full credit. "I'd find a way to make sure those kids get the money" as part of a broader post-Hurricane Katrina plan, he said.
Seriously. 19.5 million children left behind, and the best the neo-cons can come up with is blame the victim????????
I'll let the Center for American Progress get in the last word here:
As President Bush reaffirms his commitment to confront poverty in the aftermath of Hurricanes Katrina and Rita, the Tax Policy Center, a nonpartisan group in Washington, is today releasing a report concluding that the administration has left behind 19.5 million low-income children. These children are too poor to receive the full $1,000 child tax credit Bush signed into law in 2001. Then, Bush declared that his "tax relief is compassionate," but today's study demonstrates that the administration's policies benefit Americans in the top of the income scale and leave out the people who most need the government's help.
FAMILIES ARE TOO POOR TO RECEIVE HELP: The $47 billion child tax credit leaves out families that earn less than $11,000 -- the families who most need the extra $1,000. Families receive $150 for every $1,000 they earn in excess of $11,000, capping out at a maximum tax credit of $1,000. Families earning up to $110,000 can receive the full tax credit. The New York Times notes that "a family with one full-time worker at the minimum wage of $5.15 an hour receives nothing." Len Burman, author of the study, also suggested that more families than the 19.5 million probably receive partial or no credit since "poor and minority families claim tax credits at lower rates [than middle- and upper-income families]." Even more families will likely be ineligible to receive the credit next year as the minimum qualifying income will rise with inflation, leaving out families whose income fails to keep pace.
BLACK, HISPANIC, AND MILITARY FAMILIES LEFT BEHIND AT STAGGERING RATES: Today's study finds that while "18 percent of white children are in families too poor to claim the full credit, the figure is 50 percent among black children and 47 percent among Hispanics. The credit pays an average of $721 a year to white children, $564 a year to black children and $638 a year to Hispanic children." While Bush has called this tax credit "principled," many lawmakers and policy experts, including former Republican House speaker Newt Gingrich, see it as anything but principled: "That's a stunning number....I'd find a way to make sure those kids get the money [as part of a broader post-Hurricane Katrina plan]." Additionally, nearly one in five children of active-duty U.S. military families (250,000 of 1.4 million in 2003) were too poor to qualify, and another 750,000 children of military veterans denied the benefit.
ADMINISTRATION BELIEVES LOW-INCOME FAMILIES SHOULD BE APPRECIATIVE:(emphasis added) Bush has touted the child tax credit as proof of the "fairness" of his tax cuts. In 2003, White House spokesman Ari Fleischer stated that the child tax credit policy is fair because low-income people may not receive a credit, but they also don't have to pay taxes, whereas "people up the income scale -- even if they get a larger credit, still pay income taxes." Additionally, Fleischer argued that low-income people (who pay no taxes because their incomes are too low) are "very appreciative of the fact that they pay no income taxes in America." If these low-income families are so lucky to be making so little money that they don't qualify to pay income taxes, let's ask members of the Bush administration to trade salaries so that they, too, can receive the benefits of the minimum wage.
BUSH'S TAX CUTS ARE FAIR AND COMPASSIONATE TO MILLIONAIRES: The Center on Budget and Policy Priorities has found that households with annual incomes of more than $1 million -- the richest 0.2 percent of the population -- are already receiving tax cuts averaging $103,000. Moreover, these figures do not even include two tax cuts enacted in 2001 that will go into effect starting January 1, 2006. 54 percent of these two new tax cuts will also go to this top 0.2 percent, and 97 percent of the cuts will go to the 3.7 percent of households that have incomes of over $200,000 a year. The rest of the population (96 percent), which has incomes below $200,000, will receive only 3 percent of these tax cuts. The Bush administration needs to drastically change course if it hopes to repair the social and economic damage caused by Hurricane Katrina, but so far, $6.1 billion tax relief plan passed last month "will probably benefit investors and businesses long before it benefits victims."